Initial damage to a stud due to corrosion, fatigue, unexpected overloading, a weld defect or other factors could degrade the shear capacity of the stud. Based on typical push-out tests, a FEM model and theoretical formulations were proposed in this study. Six specimens with the same geometric dimensions were tested to investigate the effect of the damage degree and location on the static behavior and shear capacity of stud shear connectors. The test results indicated that a reduction of up to 36.6% and 62.9% of the section area of the shank could result in a dropping rate of 7.9% and 57.2%, respectively, compared to the standard specimen shear capacity. Numerical analysis was performed to simulate the push-out test and validated against test results. A parametrical study was performed to further investigate the damage degree and location on the shear capacity of studs based on the proposed numerical model. It was demonstrated that the shear capacity was not sensitive to the damage degree when the damage section was located at 0.5d, where d is the shank diameter, from the stud root, even if the stud had a significant reduction in area. Finally, a theoretical formula with a reduction factor K was proposed to consider the reduction of the shear capacity due to the presence of initial damage. Calculating K was accomplished in two ways: a linear relationship and a square relationship with the damage degree corresponding to the shear capacity dominated by the section area and the nominal diameter of the damaged stud. This coefficient was applied using Eurocode 4, AASHTO LRFD (2014) and GB50017-2003 (2003) and compared with the test results found in the literature. It was found that the proposed method produced good predictions of the shear capacity of stud shear connectors with initial damage.